Economist Cover Story on Russia

Need I say more? Tomorrow’s edition of the Economist pulls no punches. See excerpts below from the lead editorial. economist.jpg

What explains these self-defeating tactics? Mainly Mr Putin’s belief that energy is a weapon with which to restore the lost greatness of the Soviet Union. No longer need Russia go to the West cap-in-hand for money, as it did in Boris Yeltsin’s day. Now it can stand tall once more, not least in the neighbouring ex-Soviet countries that many in Moscow have never reconciled themselves to losing. Whenever these places seem to look to the West, still more aspire to join such Western clubs as NATO or the European Union, the Russians have reacted petulantly, as they did earlier this year by imposing trade embargoes on Georgia and Moldova. … Such authoritarianism, like the muscular use of energy, is driven partly by weakness. Russia’s army is chaotic, its population is shrinking and its economy is dangerously dependent on natural resources. That is why Mr Putin is so keen to keep a firm grip on power at home; it is also why he is so anxious to keep Russia’s seat at the top table, not just in the UN Security Council but also the G8 club of rich countries. If Russia continues on this course—and especially if Mr Putin meddles with the constitution to grab a third term—it does not deserve to stay in the G8. But it is also worth noting that Russians, Russia’s put-upon neighbours and the shareholders in the Sakhalin project are not the only people who stand to suffer as a result of the Russian economy and political system being mismanaged this way. The Russian state’s insistence on developing its oil and gas by itself is bad news for almost anyone in the world who consumes power or fuel. In the early part of the decade new production from the former Soviet Union accounted for most of the growth in the world’s supply of oil and gas. But when Mr Putin began his campaign to take control of Russia’s resources, that growth stalled, just as China’s demand for energy was taking off. The present high prices for oil and gas are the result. With exploration prospects drying up in much of the Western world, and with the countries of the Organisation of the Petroleum Exporting Countries unwilling to open the taps, Russia is one of the few countries that could produce more oil—if only Mr Putin changed his thuggish ways.